Insurance Coverage – Subrogation

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Civil

7^th Circuit Court of Appeals

Officials: POSNER, RIPPLE, and KANNE, Circuit Judges

Insurance Coverage – Subrogation

No. 14-2694 National American Insurance v. Artisan and Truckers Casualty

Appellant failure to defend insured estopped appellant from raising policy defenses to coverage during subrogation.

“Here, Artisan gambled and lost. It did not defend Michael and Viktor Barengolts under a reservation of rights. And it did not seek a declaratory judgment in the underlying action. Instead, it refused—on at least seven occasions—to defend. Because “[a]n insurer that believes an insured is not covered under a policy cannot simply refuse to defend the insured[,]” Mt. Hawley Ins. Co. v. Certain Underwriters at Lloyd’s, 19 N.E.3d 106, 111 (Ill. App. Ct. 2014) (quoting A-1 Roofing Co. v. Navigators Ins. Co., 958 N.E.2d 695, 700 (Ill. App. Ct. 2011)), the district court did not err in estopping Artisan from raising policy-coverage defenses. Accordingly, we hold that Artisan is estopped from asserting any coverage defenses under its policy with Michael and Viktor Barengolts. And because it cannot assert such defenses, it must reimburse NAICO the amount authorized by the settlement agreement, including costs for NAICO’s efforts in defending and indemnifying Michael and Viktor Barengolts in the Bernals’ lawsuit.”

Affirmed.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.